The South32 Ltd (ASX: S32) share price has hit a new 52-week low of $2.97 this morning on the back of its June quarterly report, released to the ASX this morning before market open. S32 shares have since rebounded slightly but are still trading within a whisker of the new low – currently $3.02 at the time of writing.
What was in the report?
On the surface, the June quarterly report is mostly good news. The company reported quarter-on-quarter growth of alumina, aluminium, coal, silver, lead and zinc. Metallurgical coal and payable zinc production increased 69% and 25% respectively on a year-on-year basis.
On the negative side, energy coal production was down year-on-year by 7%, as was nickel (by 6%). The company reported that "equipment availability and lower domestic sales" impacted production at the South Africa Energy Coal mine (of which the company is currently taking bids on), coming in lower than expected at 24,979 kt (26,200 expected).
The company also reported that 114 million shares were repurchased by the company during FY19, for a cost of US$281 million. South32 has now bought back over 318 million shares (at an average price of A$3.16 per share) as part of its US$1 billion cash management program.
Why has the share price gone south?
Clearly, these results did not impress the market. It seems as through South32 can do no right in investors' minds and I have a suspicion that the market isn't too interested in 'boring' miners like South32 with no exposure to oil, gold or iron ore at the moment – hence the indifference to South32's report.
One fund manager is bullish though – Schroders Investments picked up an estimated 56,000 new shares in South32 just last week and now holds 8.57% voting power in South32.
Foolish takeaway
I think the market is under-reacting to this report, as there is a lot to like in the company's June update. South32 remains a diversified and quality mining company that has the ability to deliver a lot of cash into shareholders pockets (on top of the substantial amount it has already delivered in share buy-backs and dividends over the past year). South32 is yielding a dividend of 4.7% on current prices.
